Future of Sourcing - Agile Methodology https://futureofsourcing.com/tags/agile-methodology en What is the New Normal for Businesses and Accounts Payable? https://futureofsourcing.com/what-is-the-new-normal-for-businesses-and-accounts-payable <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/What%20is%20the%20New%20Normal%20for%20Businesses%20and%20Accounts%20Payable.png"><a href="https://futureofsourcing.com/sites/default/files/articles/What%20is%20the%20New%20Normal%20for%20Businesses%20and%20Accounts%20Payable.png" title="Post-pandemic businesses have adapted by interfacing with technology to get the same tasks done with less redundancy and bulk. " class="colorbox" rel="gallery-node-1941-64Gdmmg40ak"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/What%20is%20the%20New%20Normal%20for%20Businesses%20and%20Accounts%20Payable.png?itok=4M5N4j1s" width="624" height="325" alt="Post-pandemic businesses have adapted by interfacing with technology to get the same tasks done with less redundancy and bulk. " title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>What is the New Normal for Businesses and Accounts Payable?</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/the-future-of-payments">The Future of Payments</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>What do the oracles say about society&rsquo;s return to normalcy? Bill Gates is pinning his hopes on a semi-normal return to life in the spring of 2021, provided we rapidly adopt the vaccine. Dr. Fauci&rsquo;s more conservative estimate suggests that we&rsquo;ll enjoy movie theater experiences, indoor dining and regular school attendance by late fall. But the experts&rsquo; jockeying of vaccine rollout timelines and predictions of how soon we can reschedule that twice-canceled family vacation leave one fundamental question unanswered: What aspects of normalcy are actually worth returning to?&nbsp;</p> <p>The pandemic&rsquo;s clarifying challenges to businesses were not thoroughly negative. Post-pandemic businesses have adapted by interfacing with technology to get the same tasks done with less redundancy and bulk. Daily operations have stripped down to bare essentials, some bearing costs to the customer, but many renewed in their devotion to make a more human connection with those they serve. Data security issues took a tremendous and necessary spotlight as <a href="https://news.gallup.com/poll/321800/covid-remote-work-update.aspx" target="_blank">a historic number of the U.S. workforce scrambled to telecommute</a>.</p> <p>Covid-19 shattered all illusions about how quickly any industry, company or market can change.&nbsp;</p> <p>There&rsquo;s no crystal ball to consult when it comes to making big changes with very little advance notice. <a href="https://www.mckinsey.com/business-functions/organization/our-insights/an-operating-model-for-the-next-normal-lessons-from-agile-organizations-in-the-crisis" target="_blank">Data by McKinsey</a> indicate how businesses stayed lean and financially solvent through the initial shutdowns and subsequent quarantine measures. According to the research, businesses that transformed their processes in 2020 nodded to agility as the key ingredient of their success. In the business sense, &ldquo;agility&rdquo; is defined by smaller teams that are built to work with rapid efficiency in place of traditional business models with several tiers of leadership per business unit. McKinsey tracked 25 companies across seven business sectors in their handling of the COVID-19 crisis.</p> <p>Here is the resounding sentiment of <a href="https://www.mckinsey.com/business-functions/organization/our-insights/an-operating-model-for-the-next-normal-lessons-from-agile-organizations-in-the-crisis" target="_blank">what they found</a>:</p> <p>&ldquo;Through our research, one characteristic stood out for companies that outperformed their peers: companies that ranked higher on managing the impact of the COVID-19 crisis were also those with agile practices more deeply embedded in their enterprise operating models. That is, they were mature agile organizations that had implemented the most extensive changes to enterprise-wide processes before the pandemic.&rdquo;</p> <p>The benefits of agility were measured in overall customer satisfaction, employee engagement and operational performance. They found that swifter decision-making, less time determining priorities, and faster and more flexible response processes lent themselves to the business&rsquo; overall success. In other words, being agile made everything easier.&nbsp;Nimble, clear-communicating teams enabled with good technology outpaced their slower, bureaucratic counterparts.</p> <p>A clarion call from a pandemic-tested economy is this: the bustling office setting is becoming increasingly outdated. A small, remote team working closely is capable of outpacing any team that sits less than six feet apart&mdash;and with less overhead costs.&nbsp;This is a matter of understanding the amazing flexibility of a business operations model. With technology, we now have the ability to decentralize while staying connected. Sounds paradoxical, but then again, so did social distancing.&nbsp;</p> <p>While change is good, identifying the right kind of change is essential. Here are three guiding principles:</p> <h2>1. Keep Your Business Unit Nimble with an Agile Mindset</h2> <p>Examples of an agile mindset include giving up meeting-heavy schedules and manual workloads and renewing decision-making agency in small teams. Even if the organization at large is still insistent on doing things the old way, your business unit can lead small changes with great effect.&nbsp;What&rsquo;s not working with your current accounting operations model in accounting, IT or even on the executive level? Can you <a href="https://www.nvoicepay.com/resources/blog/a-better-payments-readiness-model-for-the-new-world/" target="_blank">digitize any of your backlogged manual tasks to alleviate the stress on your team</a> and improve supplier relations?&nbsp;</p> <p>But don&rsquo;t mistake agility for speed. Speed is fast but can be blind. Agility is about delighting both the customer and those who serve them in the delivery of a seamless and elevated process.&nbsp;</p> <h2>2. Add Collaboration Tools as a Lifeline Resource for Your Team</h2> <p>The 2021 workforce demands exceptional collaboration tools. Since projections of remote work persist into the better part of 2021, it is essential that good communication infrastructure is in place to sustain team morale. Longevity is about more than just crossing the finish line, but lifting burdens of redundancy and frustration. As willpower to stay connected wanes and team needs inevitably change, it is essential that touchpoints are added between managers and employees to prevent burnout and ensure team goals are attainable and appropriate. Ask your team what heaving lifting they need assistance with and keep an eye toward any solution that may bolster cross-functionality and productivity within your team.</p> <h2>3. Retrofit for the Employee of the Future</h2> <p>Whether or not we retain the same jobs we had at the outset of 2020, job demands will have changed. Safety and wellness concerns have skyrocketed in the eyes of the consumer while values like convenience or ease of access have diminished in proportion to the limitations imposed on our lives.&nbsp; Product models will need adjustment. New verticals that businesses once sought to launch into may have dried up, leaving sales teams to pursue other avenues.&nbsp;</p> <p>Providing the workforce with more analytical tools, businesses can add value to employee roles by grounding decision-making in data points and allowing for greater transparency to daily tasks. Through new technology, the elimination of legacy technology, needless redundant tasks, and paper touchpoints, <a href="https://www.nvoicepay.com/resources/blog/here-are-the-top-tips-for-preventing-ach-credit-fraud/" target="_blank">the workforce can rest more securely in the face of unanticipated threats</a> to their employability.&nbsp;</p> <p>Our technology, operating models, and accepted biases of &ldquo;how things are&rdquo; must all change when presented with the data on how things can be done differently. Change is no longer a back-of-the-handbook contingency plan. Grit and ingenuity hold the silver lining to a resoundingly difficult year. Perhaps reversing to the way things were is a farce. The next normal will provide us gradations of clarity as waves of vaccinations roll out and restrictions ease in the late months of 2021. Yet what we do with the clear opportunities already here is a truer prediction of future business success.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/accounts-payable" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">accounts payable</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/coronavirus" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">coronavirus</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/remote-workforce" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">remote workforce</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/telecommute" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">telecommute</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/agile-methodology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Agile Methodology</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="What is the New Normal for Businesses and Accounts Payable? - Future of Sourcing" addthis:url="https://futureofsourcing.com/what-is-the-new-normal-for-businesses-and-accounts-payable"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sat, 20 Mar 2021 02:00:00 +0000 Lauren Ruef 1941 at https://futureofsourcing.com https://futureofsourcing.com/what-is-the-new-normal-for-businesses-and-accounts-payable#comments Rebuilding a Broken Chain: How Agility Can Save The World https://futureofsourcing.com/rebuilding-a-broken-chain-how-agility-can-save-the-world <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2835%29.png"><a href="https://futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2835%29.png" title="Rebuilding a Broken Chain: How Agility Can Save The World" class="colorbox" rel="gallery-node-1755-64Gdmmg40ak"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Copy%20of%20FoS%20Header%20Images%20%2835%29.png?itok=TiR031et" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/making-indirect-spend-take-the-shortest-way">Making Indirect Spend Take the &quot;Shortest Way&quot;</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>There were two stories in recent news that grabbed my attention.&nbsp; All across the country, food banks are overwhelmed with demand.&nbsp; <a href="https://www.commondreams.org/news/2020/04/10/unforgettable-footage-endless-line-cars-food-banks-stark-illustration-coronavirus" target="_blank">Families in desperate need waited for hours</a> for a week&rsquo;s worth of supplies over Easter weekend, with lines of cars stretching for miles. The demand outstretched many facilities&rsquo; ability to fulfill, with some leaving empty-handed, or with less than they need.</p> <p>Even for those with the means to pay, grocery store shelves are spotty and bare in places.&nbsp; Stores run out of eggs, meat, vegetables, and milk in addition to the now-usual scarcity of toilet paper and Clorox wipes. The &ldquo;panic&rdquo; buying ended a few weeks ago, yet shortages persist.&nbsp; We&rsquo;ve all seen it as we don our masks and queue up 6 feet apart outside our local markets. At my house, we joke that grocery shopping has become an episode of &ldquo;Chopped&rdquo;: What can you make with a can of Spam, a wilted apple, and a box of Cheerios? I haven&rsquo;t been able to get vanilla, flour, or dishwasher detergent in weeks.</p> <p>The shift in demand isn&rsquo;t obvious; people have always gone grocery shopping, so why are the shelves bare? Is it possible that my neighbors have eaten every meal at a restaurant until today? We are buying more groceries, sure, but not <em>that</em> much more!</p> <p>The reality is that the current grocery supply chain is incredibly lean and efficient. Striving to decrease food waste and reduce the cost of goods, the process of ordering is optimized to a remarkable extent.&nbsp; Complex ordering systems estimate demand and precisely fill shelves according to past trends. Most grocery stores have limited &ldquo;backroom stock&rdquo; to only the most vital products, having shifted to a direct stock method. Items coming in on a truck go straight to the shelves, maximizing floor space and decreasing expenses.&nbsp;</p> <p>On a <a href="https://seekingalpha.com/article/4044095-whole-foods-market-wfm-q1-2017-results-earnings-call-transcript?part=single" target="_blank">quarterly conference call</a> in February 2017, Whole Foods EVP of operations Ken Meyer explained that the company&rsquo;s order-to-shelf initiative cleared backrooms of all items except &ldquo;never-outs&rdquo; or items continually re-stocked. He stated, &ldquo;It&rsquo;s creating a powerful, efficient process, from the way the goods are received in the back door to bring them right out to the shelf.&rdquo;&nbsp;<a href="http://www.supermarketnews.com/retail-financial/supply-chain-changes-drive-results-target-whole-foods" target="_blank">Target similarly implemented their &ldquo;Goods to Person&rdquo; initiative</a> around the same time, which resulted in a 9% reduction in backroom storage - and the ability to expand the store&rsquo;s shoppable footprint, especially in urban areas where space is at a premium.&nbsp; In addition, this precise method of distribution reduces the total time it takes to bring stock to consumers. This <a href="https://www.wsj.com/articles/retailers-rethink-inventory-strategies-1467062280" target="_blank">method has been widely adopted across the industry</a> over the last few years, resulting in lower prices, improved efficiency, and larger consumer-facing footprints.</p> <p>Behind the scenes, the entire system depends on data-assisted ordering, which is based on historical demand. ERP systems determine the ideal inventory level of a particular item based on prior sales, adjusting for trends and seasonality. Purchase-of-sale systems deplete that inventory, and orders are created automatically to backfill to the precise level of stock needed, SKU by SKU. When the demand changes dramatically, the system orders enough to refill to the prior stock level, but adjusting the &ldquo;ideal&rdquo; stock level doesn&rsquo;t happen immediately.</p> <p>So, when you walk into the store, especially national chains and urban grocers, there are holes and bare shelves.&nbsp;</p> <p>Once the initial &ldquo;panic buy&rdquo; of toilet paper stopped, why haven&rsquo;t the stores simply restocked them and ordered more? It&rsquo;s been over a month since people walked out of Target with 400 rolls of paper towels, yet some items remain in short supply. That much of a sustained demand increase doesn&rsquo;t make sense. Automated ordering isn&rsquo;t to blame for that. It&rsquo;s baffling until you consider that bulk orders of these goods used to be made by schools, hotels, restaurants, theme parks and businesses&mdash;and those packages and distribution channels are very, very different from the route a 12-pack of Charmin takes to your cart.</p> <h1>Dumping Milk and Burying Produce</h1> <p>On the supply side of the economy, there&rsquo;s an even stranger picture. Without restaurant and commercial purchasing, <a href="https://www.nytimes.com/2020/04/11/business/coronavirus-destroying-food.html" target="_blank">farmers are dumping and composting ton after ton of food</a>.&nbsp; From produce to milk to eggs, perishable food is being deliberately destroyed because the producers don&rsquo;t have a market for it.&nbsp;</p> <p>To people working outside of the supply chain, none of this makes sense.&nbsp; Why don&rsquo;t those farmers just sell their produce to the food banks?&nbsp; Why don&rsquo;t they simply sell to the grocery stores?&nbsp;</p> <p>These producers had a supply chain which was directed toward the restaurant, government, and commercial industries.&nbsp; According to the USDA, the National School and Lunch and Breakfast Programs are the largest consumer of liquid milk in the US, distributing over 1.8 billion pints to children in the last year.&nbsp; While smaller versions of the lunch program are operating, the volume has plummeted, and suppliers who specialized in the program are dumping their milk. Produce farms are facing similar issues; they package in 50-pound bags and sell to restaurants like Applebees, Chilis, and McDonald&#39;s&mdash;restaurants that are experiencing an unprecedented drop in demand. Restaurants accounted for 25% of pork and bacon purchases nationwide, and there have been processing plant shutdowns, resulting in overcrowded pig farms.</p> <p>It&rsquo;s a broken supply chain, and food/grocery isn&rsquo;t the only one.</p> <p>Re-tooling packaging and distribution is a massive task. The machines which handle packaging cost millions of dollars and take months to implement. Theoretically, producers could switch to manually repackaging, but worker shortages and the need for intense safety measures present a real barrier to that kind of agility.</p> <p>Many suppliers and distributors are questioning the wisdom of making dramatic changes to their packaging and distribution systems&mdash;if the pandemic &ldquo;blows over&rdquo; in a few weeks, and everything goes &ldquo;back to normal,&rdquo; those heroic measures would be a further drain on an already stressed or decimated bottom line.</p> <p>If, however, demand doesn&rsquo;t go back to normal, if restaurants don&rsquo;t reopen, or reopen in a limited way, the supply chain will need to adjust permanently. If this crisis continues into the fall and into 2021, or if it starts and stops in jerks and waves, we will continue to see rolling shortages and oversupply. This uncertainty cries out for agile, elastic solutions.</p> <h1>Creating an Agile, Resilient Chain</h1> <p>COVID-19 has exposed the vulnerabilities of our highly specialized and extremely lean supply chain. The good news is that we don&rsquo;t (currently) have a supply problem. Farmers can grow the amount of food we need to eat and manufacturers can make the products we use every day. We just need to fix the connection between the two and make that connection elastic enough to handle ongoing fluctuations. In the long term, that level of agility will give us a stronger, more stable system that can accommodate all sorts of disruptions, from natural disasters to economic shifts.</p> <p>In the short term, agile actions can be taken to fill gaps. On a national level, the administration is providing funds to struggling suppliers, and the national guard has been mobilized to collect surplus food from farmers and distribute it to food banks. Last week, the <a href="https://www.ams.usda.gov/content/usda-purchase-3-billion-agricultural-commodities-issue-solicitations-interested-participants" target="_blank">U.S. Agriculture Department said it would spend $3 billion</a> to buy fresh produce, dairy and meat that will be sent to food banks. Short-term, this sort of effort is absolutely necessary to ensure that producers stay in business and that people get the food they need.</p> <p>On a smaller scale, there is exceptional innovation happening in the grocery and food industry.&nbsp; Companies across the country have already made incredible shifts: just as alcohol distributors have begun making sanitizer and fashion companies are now producing masks, farmers, distributors, and retailers are undergoing a remarkable transformation.&nbsp;</p> <p>My local grocery store has been purchasing commercially packaged items and repackaging them in-store for consumer consumption. Innovative restaurants have begun to hold &ldquo;Farmers Markets&rdquo; and offer pickup service for their excess meats and produce. These creative solutions are not only a lifeline for struggling businesses but can be a blueprint to a newer, more resilient economy.&nbsp;</p> <p>Longer-term, we need to address the vulnerabilities exposed by the current crisis. The odds are that we will be facing instability in the supply chain for quite some time. Even if the pandemic resolves quickly, and people can get back out, many companies will not recover. Primary and secondary suppliers may not come back online, and we can, unfortunately, expect waves of bankruptcies in the coming months, no matter what happens with the medical crisis. Simply waiting for things to go &ldquo;back to normal&rdquo; is a recipe for disaster.</p> <p>The organizations that will thrive in the future are those who embrace change and agility. They will target their single threads of demand and supply, and work to diversify. Manufacturing and distribution will learn how to make rapid shifts in the most Darwinian environment possible&mdash;change or die.</p> <p>It&rsquo;s not time to throw out the technology that made our supply chains so lean, either. Data models that rely entirely on historical data, without the ability to adjust for trends, need to be made more elastic. Deep learning and feedback loops can detect small changes in demand and shift ordering to keep backroom stock down while adjusting for changes in demand.&nbsp;</p> <p>Big data can provide incredible connections between suppliers and customers, and can enable organizations to make the kinds of major shifts that are required to respond to a crisis. Robotic process automation (RPA) and artificial intelligence (AI) are capable of doing research on your supply chain that an army of humans couldn&rsquo;t accomplish. <a href="https://www.fairmarkit.com/" target="_blank">Fairmarkit</a> has seen an unprecedented surge in usage of our vendor recommendation engine, which identifies suppliers automatically for goods and service purchases; other agile software providers can help to bridge this gap.</p> <p>We can rebuild the supply chain together, and we can make it elastic, resilient, and equitable together. Bring on the technology and embrace the innovation!</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/global-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Supply Chain</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/agile-methodology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Agile Methodology</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/robotic-process-automation-rpa" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Robotic Process Automation (RPA)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Rebuilding a Broken Chain: How Agility Can Save The World - Future of Sourcing" addthis:url="https://futureofsourcing.com/rebuilding-a-broken-chain-how-agility-can-save-the-world"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Thu, 07 May 2020 22:54:30 +0000 Erin McFarlane 1755 at https://futureofsourcing.com https://futureofsourcing.com/rebuilding-a-broken-chain-how-agility-can-save-the-world#comments Innovations in Sourcing: IBM Corporation https://futureofsourcing.com/innovations-in-sourcing-ibm-corporation <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/FOS%20Header%20Image_Innovations%20in%20Sourcing_0.png"><a href="https://futureofsourcing.com/sites/default/files/articles/FOS%20Header%20Image_Innovations%20in%20Sourcing_0.png" title="Innovations in Sourcing: IBM Corporation" class="colorbox" rel="gallery-node-1577-64Gdmmg40ak"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/FOS%20Header%20Image_Innovations%20in%20Sourcing_0.png?itok=vqkIQTfo" width="624" height="325" alt="Innovations in Sourcing: IBM Corporation" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <p>This October, the&nbsp;<a href="https://futureofsourcingawards.com/?__hstc=215510152.344406f4865c40604cf6029be7e958e0.1543422516683.1568923248265.1568933369650.584&amp;__hssc=215510152.1.1568933369650&amp;__hsfp=1711803377" target="_blank">Future of Sourcing Awards</a>&nbsp;will celebrate organizations and individuals that have shown innovation, leadership and transformation in categories that are critical to the sourcing industry. Interviews with the finalists provide helpful insight about their projects, the problem they sought to solve and the impact to their organizations. Below, read about how IBM&nbsp;re-organized their Global Procurement team to become aligned by business unit, with a smaller supplier-focused category organization and also implemented agile practices as a standard way of doing business.</p> </div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div> <h3><em>Can you outline why your team embarked on this project and the problem that needed to be solved?</em></h3> </div> <div> <div>IBM Global Procurement recognized the need to transform its organization to meet the evolving demands of its stakeholders. &nbsp;In general, clients viewed the procurement process as complex, having too many approvals and taking too much time to execute. &nbsp;As a result of this project, Global Procurement re-organized to become aligned by business unit, with a smaller supplier-focused category organization. &nbsp;In addition, agile practices were implemented as a standard way of doing business.</div> <div>&nbsp;</div> </div> <div> <h3><em>How were things done originally and what was the inspiration to innovate the process?</em></h3> </div> <div>IBM&rsquo;s Global Procurement was organized primarily by category with some centralization for key processes (e.g. supplier onboarding).  For example, each category leader owned entire processes from strategic sourcing to purchase order processing.  There was no direct stakeholder (business unit) alignment and all activities pushed to teams based on category.  In addition, procurement had very traditional methods of pushing work and had built up numerous metrics and management systems that did not always align and slowed the business.</div> <div>&nbsp;</div> <div> <h3><em>What KPIs did you use to measure success for this project? (For example: performance, customer satisfaction, revenue, sales or relevant financial gains?)</em></h3> </div> <div>As part of this project Global Procurement redefined its KPIs around five &ldquo;metrics that matter.&rdquo;  After piloting and rolling out the new accelerate organization and structure, Procurement realized significant improvements in NPS (+4) expense reduction (13%), and cost savings (11%).  Global Procurement also established stronger speed metrics that are still evolving.</div> <div>&nbsp;</div> <div> <h3><em>How you plan to ensure that the new model remains relevant and adapts to the future needs of the market?</em></h3> </div> <div>Agile is one of the key principles of the Global Procurement transformation.  A central change management team was established to get constant feedback from the new organization.  Retrospectives are held regularly to assess the new alignment and processes, and the organization continually corrects its course as environment changes necessitate.</div> <div>&nbsp;</div> <div> <h3><em>What advice do you have for those who may want to implement this innovative approach in their own organizations?</em></h3> </div> <div> <div>Agile organizations iterate work and create an environment that encourages speed to achieve outcomes, while acknowledging that failing fast is acceptable and an enabler to improvement.  To make such a transition, strong and positive leadership is required to change ways of working and challenge traditional approaches to doing business.  Focus on the outcome, and if processes or measurements don&rsquo;t improve outcomes, eliminate them!  In addition, while it remains important to maintain strong category-focused expertise, moving to a client-centric organization can increase the speed of the organization and keep priorities better aligned.</div> <div> <h3><em>How much time did this specific innovation take to implement into your organization?/em&gt;</em></h3> </div> <div>The design, pilot and implementation of this project took approximately one year.&nbsp;</div> </div> <p><em>&nbsp;</em></p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/agile-methodology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Agile Methodology</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/future-of-sourcing-awards" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Future of Sourcing Awards</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/team-development" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Team Development</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Innovations in Sourcing: IBM Corporation - Future of Sourcing" addthis:url="https://futureofsourcing.com/innovations-in-sourcing-ibm-corporation"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div> Fri, 23 Aug 2019 23:00:55 +0000 Future of Sourcing Awards 1577 at https://futureofsourcing.com https://futureofsourcing.com/innovations-in-sourcing-ibm-corporation#comments Outsourcing: Agile Culture in Business https://futureofsourcing.com/outsourcing-agile-culture-in-business <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/Agile_Method%20624x325.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/Agile_Method%20624x325.jpg" title="Outsourcing: Agile Culture in Business" class="colorbox" rel="gallery-node-1288-64Gdmmg40ak"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Agile_Method%20624x325.jpg?itok=oXjRsoYq" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div>A&nbsp;<a href="https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/delivering-large-scale-it-projects-on-time-on-budget-and-on-value" target="_blank">recent study</a>&nbsp;by McKinsey and the University of Oxford on 5,000 large IT projects showed that 17 percent go so poorly that they threaten the very existence of the company. In addition, over half go massively over budget and deliver 56 percent less value than predicted. An example of this is finding a home listed for $250,000, paying $275,000, and moving in to find that it is really only worth $125,000. We would not agree to it in everyday life, and we certainly should not accept it in our IT departments. The blame for these bad end results can be attributed to poor project management and outdated ways of working. Based on the research, a solution for these outcomes focus around four key points:</div> <div>&nbsp;</div> <ul> <li>Mastering a method that will assure the most valuable part is completed before the project ends&nbsp;</li> <li>Shifting the focus from budget and scheduling and moving into a long-term, sustainable approach with stakeholders (read: users) in mind &nbsp;</li> <li>Working on sustaining know-how and keeping it in the company &nbsp;</li> <li>Creating effective teams that are self-driven while maintaining their focus on a long-term strategy&nbsp;</li> </ul> <div>If you are an IT manager or a C-suite level executive, you must think about the possible sourcing models that will satisfy the above requirements to make your next project or current service more efficient. Based on our experience in the industry, in order for the above to work, a cultural shift that is focused on shortcutting business needs with the workforce that does the job is necessary, as well as &nbsp;removing the boundaries that make higher management detached from people executing the work. The shortest way to achieve this is to employ an Agile methodology.&nbsp;</div> <div>&nbsp;</div> <div>As a reminder, <a href="http://www.futureofsourcing.com/can-the-agile-model-help-a-rigid-business" target="_blank">Agile</a> is a set of methodologies based on four main principles that were written directly for software development. &nbsp;</div> <div>&nbsp;</div> <ul> <li>Individuals and interactions over processes and tools</li> <li>Working software over comprehensive documentation</li> <li>Customer collaboration over contract negotiation</li> <li>Responding to change over following a plan&nbsp;</li> </ul> <div>A skilled IT manager can quickly see that an Agile methodology (with slight adjustments) can be put in place of any process. However, that requires change, which is often painful. Is it worth it? The way to find out is to pick a service or a project with people who are likely to be early adopters and ask them to employ at least some of the tools, processes or methods utilized in Agile. Nonetheless, since the process is happening within a company, it is likely to lack an outside perspective. More dedicated IT managers can employ a skilled Agile coach or consultant to ensure that current processes in the company will not be an impediment (or at least will show that they are) in the process of adopting Agile. &nbsp;</div> <div>&nbsp;</div> <div>There have been times when we have seen two projects run in parallel that were supposed to deliver the same results. Both project teams had little to no knowledge about the other, therefore no competition was enforced. Results showed that Agile project teams (not only software development) were able to deliver meaningful tools within the first two to four months. Projects usually ended within six to 12 months while delivering enough value that users stopped asking for more. On the other hand, sibling projects did not have that advantage. In many scenarios, non-Agile projects were still in a design phase after the first two to four months, and some did not leave it before 12 months. &nbsp;</div> <div>&nbsp;</div> <div>Regardless of the size of a company and current position, working on outperforming competition is key. The half-life of business requirements to any IT project is between six and 12 months. That means if a team is going to deliver working software in half a year, it is very likely that 25 to 50 percent of the business requirements will no be longer valid. Based on market trends, clients will expect something different by then. &nbsp;</div> <div>&nbsp;</div> <div>Until now, most IT managers employed some part of Agile in their organization within the last year. These processes are frequently applied to the old ways of working and expected to deliver what is &ldquo;promised&rdquo; by Agile followers. Checking Agile project management status is important when working with new clients, regardless of what is claimed. This is because off/nearshore location employees typically are younger than those in mother locations, therefore they tend to be more familiar with Agile ways of working and new technologies. If a company has an Agile process rooted in old ways of thinking, many problems arise that make the adoption of an extended team harder than it needs to be. Therefore, it is important to focus on resolving process issues first, so the cultivation of a new team/location brings a return on investment as quickly as possible. &nbsp;</div> <div>&nbsp;</div> <div>These questions will help you better understand how to utilize Agile in your IT department: &nbsp;</div> <div>&nbsp;</div> <ul> <li>Time to market &ndash; Do project teams deliver minimal viable products (MVPs) within three months or less?</li> <li>Alignment &ndash; Is our online product or service competitive due to a constant alignment with client needs?</li> <li>Ways of working &nbsp;&ndash; &nbsp;Does our workforce think that improvements in ways of working are easy to make? &nbsp;</li> <li>Self-sustaining &ndash; Are methodologies and tools imposed onto the teams?&nbsp;</li> </ul> <div>These are organizational and business questions that focus on the four main values of Agile. Lack of a positive answer to the first three questions and a negative to the fourth means that an organization is still lacking a significant Agile factor. The first two are especially important because they directly relate to a return on investment. Utilizing proper Agile methodology in business is essential to keeping up with current market trends. An Agile approach must be empowered from top to bottom, which means that in some scenarios the entire business, including sales and finance, must go through the pain of change as well. &nbsp;</div> <div>&nbsp;</div> <div>In summary, the aspects that are hard to deal with and, based on statistics, will be even harder in the next few years, are maintaining talent, utilizing workforce creative potential and having effective teams. Now it is more important than ever to make the right strategic outsourcing decisions the first time. Looking into off/nearshoring might be a great way to solve issues, however, the price tag on a head is not the key ingredient. The focus, rather, should be on what you get for the price and whether or not the model is sustainable in the long term.</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/it-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">IT Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/agile-methodology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Agile Methodology</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/business-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Business Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/sourcing-models" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sourcing Models</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/software-development" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Software Development</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Outsourcing: Agile Culture in Business - Future of Sourcing" addthis:url="https://futureofsourcing.com/outsourcing-agile-culture-in-business"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 08 Oct 2018 14:57:26 +0000 Rafal Chomicz 1288 at https://futureofsourcing.com https://futureofsourcing.com/outsourcing-agile-culture-in-business#comments